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Sept. 15—Increased bureaucracy and documentation obligations are the main obstacles companies face in the first few months of Germany's new minimum wage legislation, Sarah Wékel, labor lawyer and associate in the Berlin office of Baker & McKenzie, said at a breakfast briefing on “Minimum Wage in Legal Practice.”

Approximately 3.7 million German employees are eligible for Germany's first hourly minimum wage of 8.50 euros ($9.50), which has been in effect since Jan. 1.

An expert commission—made up of three employer and three employee representatives and two academic experts—will adjust the minimum wage every two years beginning Jan. 1, 2017.

Interns under 18 and the long-term unemployed in the first six months of new employment are not eligible for the minimum wage.

Penalties and Reporting

Employers risk fines of up to 500,000 euros ($561,000) for attempting to evade the minimum wage requirement, and affected employees can sue their employers for up to three years after a failure to pay the minimum wage.

Companies not compliant with the minimum wage requirement can also be excluded from participating in public contracts, Wékel said, noting that the payment obligation applies to companies based both in Germany and abroad that have employees working in Germany.

New documentation requirements have been imposed on employers in sectors where a special risk of abuse exists, such as construction, logistics, housekeeping and the restaurant industry.

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